Creditors Ask High Court to Oust
Management at Asia Pulp & Paper

SINGAPORE --
Deutsche Bank AG
and
BNP Paribas SA,
in a surprise move, asked the Singapore High Court to remove the Indonesian management of debt-ridden
Asia Pulp & Paper Co.
and replace it with a Singapore accounting firm.

The two European banks, which are creditors of the Singapore-headquartered company controlled by Indonesia's Widjaja family, on Monday petitioned the court to appoint a "judicial manager" to work with APP's hundreds of creditors to restructure the company's $13.9 billion in debt and obligations.

The petition said the current management and the Widjaja family are "largely responsible for the overexpansion and overextension" of APP, which owns pulp and paper businesses in Indonesia and China. "The petitioners and indeed the creditors have lost faith in their [management's] ability to manage the debts of the APP Group," it said, adding that APP management has been "evasive" and is trying to "drag matters out" on debt-restructuring.

The document also said there was widespread concern among creditors about the accuracy of APP's financial statements and "real fear that substantial assets are being put out of the creditors' reach via transactions with related parties."

Monday's filing surprised bankers, in part because Deutsche Bank is a member of the creditors' steering committee appointed in April 2001, shortly after APP declared a debt-standstill. APP, with
Credit Suisse First Boston
as its financial adviser, presented a restructuring plan this February, which the creditors rejected.

Deutsche Bank said its petition was intended to "facilitate the efficient restructuring" of APP's debts to allow the company to continue as a going concern. The big German bank declined to comment further.

APP declined to comment on the petition. A person close to the company said he was surprised that Deutsche Bank, as a member of the creditors committee, "appears to have taken a unilateral move."

Since APP stopped payment to some suppliers early last year, more than 10 lawsuits seeking repayment have been filed in Singapore. There have also been two petitions asking the High Court to wind up the company, neither of which was accepted.

In their petition, Deutsche Bank and BNP Paribas of France said they believe there is a reasonable probability of rehabilitating APP and that installing new management would serve creditors better than winding up the company.

Asking the court to take a "robust approach," the banks said that allowing professionals to take charge of the APP restructuring process "will enhance the perception of lenders' rights in Indonesia. The benefit of this, as the Indonesian economy seeks fresh financing from the international community, is not to be underestimated." The petition asked the court to appoint the firm of Foo Kon Tan Grant Thornton as the judicial manager.

Tom Wright of Dow Jones Newswires in Jakarta contributed to this article.